Job work exemption depends on principal manufacturer's duty liability; factual verification of final goods duty payment was required.

Exemption for intermediate job work under the notification applies only where the principal manufacturer is liable to pay appropriate duty on the final goods; goods subject to nil duty or wholly exempt goods do not satisfy the condition. Because entitlement depended on whether duty was paid for the entire relevant period, the issue required factual verification rather than final determination on the existing record. The matter was therefore remanded to the original adjudicating authority for examination of the principal manufacturer's duty payment during the disputed period.

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Issues: Whether the appellant, as a job worker carrying out an intermediate production process, was entitled to exemption from service tax under the relevant notification when the availability of exemption depended on whether the principal manufacturer paid appropriate duty on the final goods.

Analysis: The exemption for carrying out an intermediate production process as job work applies only where the goods are such on which appropriate duty is payable by the principal manufacturer. The expression "payable" does not cover nil rate of duty or goods wholly exempted, as clarified by the notification's definition. Since entitlement to the exemption depended on whether the principal manufacturer had paid duty on the final product during the relevant period, the matter required factual verification. A return indicating duty payment for one month had been produced, but the issue had to be examined for the entire period in dispute.

Conclusion: The exemption could not be finally decided on the existing record and the matter had to be verified by the original adjudicating authority.

Final Conclusion: The demand was not finally adjudicated and the matter was sent back for verification of the principal manufacturer's duty payment for the relevant period.

Ratio Decidendi: Exemption for job work under the notification is available only when the principal manufacturer is liable to pay appropriate duty on the final goods, and the factual existence of such duty payment must be verified for the relevant period.

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